National Savings Certificate (NSC VIII Issue) 2026
Five-year fixed-rate certificate with a tax deduction on principal and reinvested interest.
Rates for July–September 2026 (Q2 FY 2026-27) · Updated 27 September 2026What is National Savings Certificate (NSC VIII Issue)?
The National Savings Certificate (VIII Issue) is a five-year savings bond sold at post offices. Your rate is locked on the purchase date, interest compounds annually and is paid only at maturity. NSC is popular with salaried taxpayers in the old regime because both the investment and the yearly accrued interest (for the first four years) qualify for the ₹1.5 lakh deduction.
NSC at a glance
| Particular | Details |
|---|---|
| Current interest rate | 7.7% p.a. (Jul–Sep 2026) — locked for 5 years |
| Maturity value | ₹1,000 grows to about ₹1,449 |
| Tenure | 5 years |
| Investment | Min ₹1,000, multiples of ₹100, no maximum |
| Holding types | Single, joint (up to 3 adults), minor through guardian, minor above 10 in own name |
| Available at | Post offices (e-NSC through India Post / IPPB online) |
| Pledge | Can be pledged as collateral for bank loans |
| Premature encashment | Only on death, court order or forfeiture by a pledgee |
Government-notified terms for July–September 2026 (Q2 FY 2026-27). Verify the latest notification before investing.
Features & benefits of NSC
Rate on purchase date applies till maturity.
Interest of years 1–4 is deemed reinvested and qualifies for Section 80C / 123 within the ₹1.5 lakh limit.
Banks accept NSC as security for loans.
Useful for parking large sums at a fixed rate.
Can be transferred from one person to another in specified cases and between post offices.
Eligibility — who can invest?
- Resident Indian adults (single or joint up to 3).
- Guardian on behalf of a minor or person of unsound mind.
- Minor above 10 years in own name.
- NRIs, HUFs and trusts cannot invest (an NRI can hold till maturity if bought as resident).
How does NSC work?
- Buy a certificate at the post office or online (e-mode).
- Interest compounds every year at the locked rate but is not paid out.
- On maturity after 5 years, the principal plus accumulated interest is paid.
- For tax, each year’s accrued interest is income; years 1–4 interest is also eligible for deduction as reinvestment.
Tax benefits of NSC
| Stage | Tax treatment |
|---|---|
| Investment | Deduction up to ₹1.5 lakh under Section 80C / 123 (old regime) |
| Accrued interest (yrs 1–4) | Taxable but deemed reinvested → also deductible, so effectively tax-neutral within the limit |
| Year-5 interest | Taxable, not deductible |
| TDS | None — declare interest yourself |
Section 80C of the Income-tax Act, 1961 is Section 123 of the Income-tax Act, 2025 from tax year 2026-27. Deductions apply only in the old tax regime.
Withdrawal, premature closure & maturity rules
| Situation | Rule |
|---|---|
| Before maturity | Not allowed except on death of holder, forfeiture by a pledgee, or court order |
| After death | Nominee / legal heir can encash any time |
| At maturity | Full maturity value credited to your savings account |
At maturity
| Option | What happens |
|---|---|
| Year-wise interest on ₹1,000 | Yr1 ₹77.00 · Yr2 ₹82.93 · Yr3 ₹89.31 · Yr4 ₹96.19 · Yr5 ₹103.60 → maturity ≈ ₹1,449 |
Loan against NSC
| Parameter | Rule |
|---|---|
| Loan against NSC | Banks and NBFCs accept NSC as collateral by pledge/transfer; margin and rate depend on the lender |
NSC returns — worked examples
| Investment | Maturity @7.7% (5 yrs) | Interest earned | Deduction available |
|---|---|---|---|
| ₹10,000 | ₹14,490 | ₹4,490 | Principal + yrs 1–4 interest |
| ₹1,00,000 | ₹1,44,903 | ₹44,903 | ₹1 lakh + reinvested interest (limit ₹1.5 lakh total) |
| ₹5,00,000 | ₹7,24,517 | ₹2,24,517 | Only ₹1.5 lakh in total per year |
Annual compounding at the locked rate. Values are before tax.
NSC calculator
How to open / invest in NSC
- Visit a post office (or use India Post net banking for e-NSC).
- Fill the NSC application form.
- Submit Aadhaar & PAN (PAN mandatory above ₹50,000).
- Pay by cash, cheque or transfer.
- Receive e-certificate / passbook; keep the certificate number safe.
Documents required
- Aadhaar
- PAN (mandatory above ₹50,000; source-of-funds proof above ₹10 lakh)
- Photographs
- Minor’s age proof for minor certificates
Important forms
| Form | Purpose |
|---|---|
| Application form | Purchase |
| Form NC-32 / transfer form | Transfer between persons / post offices |
| Pledge form | Pledge to bank |
| Closure / claim form | Maturity or death claim |
Advantages & limitations
- Rate locked for 5 years
- No upper investment limit
- Accepted as loan collateral
- Reinvested interest deductible
- No TDS
- Interest is taxable
- No premature encashment for liquidity
- No regular payout
- Deduction only in old regime
Mistakes to avoid
- Forgetting to declare accrued interest every year in the ITR
- Claiming year-5 interest as a deduction
- Assuming NSC can be encashed early in an emergency
NSC vs other saving schemes
| Scheme | Rate | Tenure | Minimum | Tax |
|---|---|---|---|---|
| NSC | 7.7% p.a. | 5 years | ₹1,000 | EET (reinvested interest deductible) |
| KVP | 7.5% p.a. (compounded) | 115 months (9 years 7 months) | ₹1,000 | Taxable — no deduction |
| PO TD | 6.9% – 7.5% p.a. | 1, 2, 3 or 5 years | ₹1,000 | 5-year TD qualifies for deduction; interest taxable |
| PPF | 7.1% p.a. | 15 years + 5-year extension blocks | ₹500 per financial year | EEE |
| Tax Saver FD | ≈5.5% – 7.75% p.a. (bank-wise) | 5 years (lock-in) | ₹100 – ₹1,000 (bank-wise) | Deduction on deposit; interest taxable |
Frequently asked questions
Is NSC interest taxable?
Yes, but interest for years 1–4 is deemed reinvested and qualifies for deduction within the ₹1.5 lakh limit (old regime).
Can I encash NSC before 5 years?
Only on death, forfeiture by pledgee or court order.
Is there TDS on NSC?
No, but the interest must be declared.
Can NSC be bought online?
Yes, through India Post internet banking / IPPB for linked post-office savings accounts.
Information is for education and comparison. Interest rates are notified by the Government every quarter and scheme rules can change — confirm with India Post, your bank, EPFO or PFRDA before investing. FinancePortal is not a financial or tax adviser.